SBI home loans get cheaper with reduction in MCLR

State Bank of India on revised downwards its lending rates by 5 basis points to 9.15 per cent, based on marginal cost of funds, with effect to this loans will get cheaper. The new minimum lending rates are effective from May 1, State Bank of India said in a release.

The reduction has been done across all maturities and now the overnight MCLR stands at 8.90 per cent. With this revision, home loans have also become cheaper. Now, the rate of interest for women borrowers stands at 9.35 per cent whereas other borrowers will be charged 9.40 per cent. The new rates came into effect from May 1.

Banks have been asked to move to MCLR for pricing of loans by the Reserve Bank of India (RBI) since April this year to improve monetary transmission. This is also expected to improve bank credit in the system

Last month, State Bank of India had set the MCLR at 9.20 per cent after the Reserve Bank of India cut the repo rate by 25 basis points. With this reduction, the home loan interest rate for women borrowers has come down to 9.35 per cent, while for others it now stands lower at 9.40 per cent.

Banks are expected to review their MCLR every month as per the central bank’s guidelines. At present, SBI’s MCLR is the lowest compared to other housing finance banks.